ITALTILE

Basis of preparation

These reviewed interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. These results have been prepared under the supervision of Executive Director: Finance, Ms T T A Mhlanga.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of these interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 June 2019, except for the adoption of new and amended IFRS and IFRIC interpretations which became effective during the current financial year. The application of these standards and interpretations did not have a significant impact on the Group's reported results and cash flows for the six months ended 31 December 2019 and the financial position at 31 December 2019.

There are no material contingent assets or liabilities at 31 December 2019.

The Group does not fair value its financial assets or liabilities in accordance with quoted prices in active markets or market observables, as there is no difference between their fair value and carrying value due to the short-term nature of these items, and/or existing terms are equivalent to market observables. There were no transfers into or out of Level 3 during the period.

The Group has agreed to sell a 10% non-controlling interest in Cedar Point Trading 326 Proprietary Limited effective at the beginning of July 2019 to new business partners, at a cost of R15,9 million, reducing the Group's interest in this entity to 90%.

During the 2014 financial year, the Group implemented a share incentive scheme for all employees of the Group and its franchisees that had been in the employ of the Group and/or franchise network for a period of three uninterrupted years of each allotment date in August every year from implementation date. As a result, 8 million of the Group's shares, net of forfeitures, were held by qualifying staff members at 31 December 2019 (2018: 8 million). Until vesting, the shares will continue to be accounted for as treasury shares and have an impact on the diluted weighted average number of shares.

The fourth allotment of shares in the scheme, granted in 2016, vested on 31 August 2019. A total of 94 employees qualified for the vesting, of which five employees opted to receive the shares and the balance received the net value of the awards in cash. This resulted in a decrease in treasury shares of 909 106 (2018: 1 044 139) shares.

The scheme is classified as an equity-settled scheme in terms of IFRS 2 Share-based Payment, and has resulted in a charge of R15 million (2018: R16 million) to the Group's income; R13 million (2018: R14 million) of this charge is a once-off accelerated expense for franchise staff.

* Adjusted for once-off charge of R39 million related to the BBBEE Transaction.

No adjustments to earnings are required for diluted earnings per share calculations, as the share awards do not have an impact on diluted earnings.

Set out below is the disaggregation of the Group’s revenue from contracts with customers:

Turnover represents net revenue from sale of goods, excluding value added tax and intercompany sales.

* Franchise income has been disaggregated from other operating income.

The directors are not aware of any matters or circumstances arising since the end of the reporting period which significantly affect the financial position at 31 December 2019 or the results of its operations or cash flow for the period then ended.